September 26, 2012

To the strains of Kid Rock’s “Born Free,” Mitt Romney took to the stage at a minor league baseball park in Nashua, N.H., on Sept. 7 flanked by his wife, Ann, and delivered a standard — albeit slightly longer — version of his stump speech.

But unless you were at Holman Stadium that day, saw it on the local TV news or read about it the next day in the Union Leader, you probably didn’t hear anything about it. That’s true of most stump speeches.

While the Nashua stump speech was very much a local event, presidential candidates tend to deliver very similar versions of the same speech over and over as they make their long-form pitch to audiences around the country. Just as with our previous analysis of Obama’s stump speech, we found numerous instances of candidate spin in what Romney had to say. For example:

Romney says Obama “said by now [unemployment] would be down to 5.4 percent.” But Romney is referring to a speculative report issued at the beginning of Obama’s presidency containing projections — not promises. Those projections relied on prevailing economic models that quickly proved to have underestimated the depths of the recession at that time.

Romney says median family income dropped $5,000 under Obama. That’s an exaggeration. The true loss of inflation-adjusted, median family income was $3,290 during Obama’s first three years. Romney’s figure is based on a report that covers a period that includes 13 months before Obama took office.

Romney says health insurance premiums have gone up $2,500 under Obama. The actual increase has been $1,700, most of which was absorbed by employers and only a small part of which is attributable to the health care law.

Romney blames Obama for the cost of gasoline doubling, but that’s misleading. Gasoline prices happened to be unusually low when Obama took office due to the recession and financial crisis.

Romney cited a Chamber of Commerce survey as evidence that small-business owners are less likely to hire because of the health care law. But experts warn not to place too much weight on the survey because it was an opt-in, online survey.

Romney said Obama “cut Medicare by $716 billion to pay for Obamacare,” but these cuts in the future growth of spending prolong the life of the Medicare trust fund, stretching the program’s finances out longer than they would last otherwise.

Romney said the health care law is “killing jobs in small business.” But CBO says the law would have a “small” impact on jobs, mainly affecting the amount of labor workers choose to supply. Those getting subsidies, for instance, might work less hours since they’re paying less for health care.

Romney said he would bring health care costs down by “finally deal[ing] with malpractice costs,” but experts say medical malpractice doesn’t make much of a dent in health care spending.

There are other misleading claims — including bluster on the Keystone XL pipeline and a claim that Obama has lived up to a “promise” about “skyrocketing” energy costs. And, of course, no Romney speech is complete without a reference to Obama’s comment, “If you’ve got a business, you didn’t build that,” a quote that has been lifted out of context.

Full quotes and our analysis of the accuracy of claims in Romney’s stump speech are contained in the Analysis section that follows.

Note to readers: This is the second part of a two-part series examining the factual claims made by both major candidates. We posted our findings about President Barack Obama’s stump-speech claimsin a previous Featured Article.

Analysis

For the purposes of this story, we focused primarily on Romney’s speech in Nashua, N.H., on Sept. 7. (You can watch an amateur video of Romney’s Nashua speech here.) But Romney doesn’t always deliver the exact same stump speech. He sprinkles particular claims in some speeches but not others. And so we have included a few claims from two other recent Romney speeches — one made the same day in Orange City, Iowa, and another from a campaign event in Mansfield, Ohio, on Sept. 10.

Here’s what we found:

The Unemployment Promise?

Romney: [Obama] said by now [unemployment] would be down to 5.4 percent.

This is a slight variation on an old, frequently cited (and misleading) claim that Obama promised to keep unemployment below 8 percent. Its roots are in a report issued by Christina Romer, then chair of Obama’s Council of Economic Advisers, and Jared Bernstein, who held the title of “chief economist” to Vice President Joe Biden. The Jan. 9, 2009, report sought to forecast the unemployment rate with and without the then-proposed economic stimulus. Romney is correct that the report projected the unemployment rate with the economic stimulus would be 5.4 percent in the third quarter of 2012. The report projected it would be about 6 percent without the stimulus.

Romney, however, has framed these forecasts as Obama promises, and that’s a stretch. For one, the report emphasized in several places that due to the volatility of the economy at the time, there was “substantial uncertainty around all of our estimates.”

As we wrote back in June 2009, the White House explanation was that the economic situation Obama inherited simply turned out to be much worse than most economists realized at the time. Indeed, the original chart was based on economic projections that were in line with what private economists were forecasting in early January 2009, but those forecasts were being revised for the worse even before any stimulus money was spent. Here’s the original chart:

It shows, for example, that the Obama team originally estimated that unless a stimulus plan was enacted, the unemployment rate would reach nearly 9 percent sometime in the first three months of 2010. But as things turned out, even with the big spending package in place, the jobless rate shot up to 9.4 percent in May 2009, according to the U.S. Bureau of Labor Statistics. In short, it was a highly speculative report containing projections — not promises — that relied on prevailing economic models that quickly proved to have underestimated the depths of the recession at that time.

Median Income

Romney: And so the median income in America, instead of going up like the president said it would, has instead come down by $5,000 a family.

This is an exaggeration. Typically, Romney claims family income has fallen by $4,000 (not $5,000) under Obama. But whether $5,000 or $4,000, as we noted in our coverage of the convention speech, the number is inflated. New figures from the Census Bureau for 2011 — released after Romney spoke — show the true loss of real (that is, inflation-adjusted), median family income was $3,290 during Obama’s first three years.

Romney took his $4,000 figure from a study by Sentier Research back in July. But he misrepresents it. Part of that $4,000 loss took place prior to Obama taking office in January 2009. It doesn’t say exactly how much of that $4,000 drop came before Obama took office.

The study measured the drop in household (not “family”) income starting in December 2007, when the recession officially started — which was 13 months before Obama took office — and ending in June 2012.

More recently, Romney has said simply that median household income “is down every year for the last four years,” which is true. But that also exaggerates, since it includes Bush’s last year plus Obama’s three years.

Finally, there’s some reason to think the income decline bottomed out a year ago. Sentier Research, which Romney cites as his source, says in its latest report — issued Sept. 10, just before the official Census figures for 2011 — that household income is higher now that it was in September of 2011, when Sentier’s Seasonally Adjusted Household Income Index hit its lowest point. (See Figure 1, Page 10.)

Health Insurance Premiums

Romney appears to have mixed up two statistics here: Obama’s promise to reduce health insurance premiums by $2,500 (an optimistic claim we have questionedseveraltimes, ever since the soon-to-be president first made the promise on the campaign trail) and the actual rise in insurance premiums. As we reported in March, the average cost of a family policy rose by $1,300 between 2010 and 2011, according to the Kaiser Family Foundation’s annual survey (Exhibit 1.110). (Even if you include the year before — so 2009 to 2011 — the increase was $1,700, not $2,500.)

Moreover, the $1,300 rise in premiums between 2010 and 2011 is the total cost for both employers and employees — not $1,300 out of pocket for the average family. In fact, the Kaiser Family Foundation report said that the increase in what workers contribute wasn’t “a statistically significant increase over the 2010 values.”

Romney often implies that Obama’s health care law is to blame for the rise in premiums, but when we looked into that issue last October, experts told us it was only responsible for a small portion of the increase. Specifically, they said, more generous coverage requirements in the law caused premiums to go up by 1 percent to 3 percent, while all told, premiums went up 9 percent. The bulk of the increase was tied to rising health care costs.

Gasoline Cost Doubled?

Romney: The cost of gasoline doubled [under Obama].

This staple of Romney’s stump speeches is technically correct, but awfully misleading. Gasoline prices when Obama took office were unusually low due to the recession and financial crisis.

The average price for regular gasoline was $3.88 in mid-September, according to the U.S. Energy Information Administration, a bit more than double the $1.84 average on the week Obama was sworn in. But the average exceeded $4 a gallon for seven weeks during the summer of 2008, and it has never reached $4 under Obama.

Skyrocketing Energy Prices

In another stump speech made the same day, this one in Orange City, Iowa, Romney added this frequently cited distortion to his attack on energy prices:

Romney: One promise [Obama] kept, though, he said if his energy policies got put in place, the cost of energy would skyrocket. And that’s happened.

As we have noted previously, Obama’s “skyrocket” quote was part of a discussion about cap-and-trade as a means to reduce greenhouse gases.

Obama, speaking to the editorial board of the San Francisco Chronicle on Jan. 17, 2008, said electricity costs would “necessarily skyrocket” as a result of capping emissions levels, and that his job as president would be to convince the public and Congress that benefits outweigh costs.

But the cap-and-trade plan Obama endorsed — the American Clean Energy and Security Act (H.R. 2454) — included allowances to electric companies to protect consumers from increases in electricity bills. More important, contrary to what Romney said, it didn’t “happen.” The bill died in the Senate.

The Pipeline

Romney: I’m going to get that pipeline from Canada so we can get more oil.

Support for the Keystone XL pipeline has been a reliable applause line in Romney stump speeches for months. But there’s less here than meets the eye.

The president merely delayed a decision on the controversial northern leg of the project, which would bring oil from Hardisty, Alberta, to Steele City, Neb. The original route through Nebraska’s environmentally sensitive Sandhills area met with bipartisan opposition from the state’s political leaders. The company that wants to build the pipeline– TransCanada Corporation — filed a new proposed route with the Nebraska Department of Environmental Quality in early September. The company expects to get approval in the first quarter of 2013, and place the pipeline in service in 2015. The southern portion of the pipeline is already under construction.

Meanwhile, there’s nothing to prevent more Canadian oil from coming into the U.S. right now, should Canada be able and willing to send it. Existing cross-border pipelines already have much more capacity than they are using, according to a study produced for the U.S. Department of Energy by EnSys Energy & Systems Inc. of Lexington, Mass., in December 2010. And the study predicts that surplus capacity will persist at least until the year 2020, even if the Keystone is never built (see table 3-4).

Unreliable Survey

Romney: Three-quarters of the small businesses in this country that were surveyed by the Chamber of Commerce said they were less likely to hire people because of Obamacare.

When Romney cited this same survey in June, we cautioned not to put too much weight on it because it was an opt-in, online survey.

The survey was conducted online by the U.S. Chamber of Commerce — which opposes the health care law and has run numerous TV ads attacking it — in late March and early April. It queried 1,339 executives at companies with fewer than 500 employees and revenues of less than $25 million. The chamber reported that 73 percent said the health care law is “an obstacle to growing their business and hiring more employees.”

So Romney has accurately cited the survey. The problem is that because it was based on an online, opt-in survey of small-business executives, the chamber can’t be sure it’s a representative sample of small-business executives. A press release from the Chamber of Commerce acknowledges as much: “This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.”

Back in June, we spoke with Scott Keeter, director of survey research at the Pew Research Center and the most recent past president of the American Association for Public Opinion Research. He talked about the limitations of such surveys. “The bottom line is that surveys that have self-selected samples don’t have any known relation to the target group [in this case small-business owners],” Keeter said. “As a result, it is difficult, if not impossible, to know what kind of weight to give this.”

That is why, Keeter noted, major news organizations like the Washington Post, New York Times andABC News have strict policies prohibiting the reporting of such surveys.

Raiding Medicare to Pay for Obamacare?

Romney often says that Obama funneled $716 billion from Medicare to pay for the health care law — as he did at a campaign event in Mansfield, Ohio, on Sept. 10:

Romney: He’s cut Medicare by $716 billion to pay for Obamacare.

Various incarnations of this claim have cropped up in Romney’s campaign speeches — including claims that Obama is “cutting” “funneling” or “raiding” $716 billion from Medicare to pay for the health care law. But Medicare money isn’t being taken away. The Affordable Care Act calls for a$716 billion reduction in the growth of Medicare spending over 10 years, a move that — if successful — would keep the hospital insurance trust fund solvent for an additional eight years. Most of the $716 billion reduction — about $415 billion — comes from a reduction in the future growth of payments to hospitals through Medicare Part A. And Medicare Part A’s trust fund, as we’ve explained before, is in trouble financially. Without the spending reductions, the program is projected to be insolvent — paying out more than is taken in from payroll taxes — in 2016. With the reductions, that insolvency date is projected to be put off until 2024.

Furthermore, as we explained in detail in our story “Medicare’s ‘Piggy Bank,’ “ Medicare doesn’t have $716 billion sitting around that could be “raided.” The president can’t take money out of the trust fund — which had $244.2 billion at the end of 2011. Medicare holds its trust fund bonds and can cash them in as it needs to cover whatever isn’t paid by current payroll taxes. The health care law even increases the amount of tax revenue that will flow into the trust fund by imposing a 0.9 percent Medicare surcharge on certain high-income individuals.

If Part A doesn’t need to spend income it receives from payroll taxes immediately, Treasury issues Medicare a bond and the amount is credited to Medicare’s Part A trust fund. When Medicare wants to cash that bond, Treasury has to pay it, even if Treasury already spent the original money on something else.

And that’s where Romney has a point. The health care law counts those savings as money that can also cover other aspects of the law. But both the Congressional Budget Office and Medicare’s chief actuary have said that in practice, the $716 billion savings can’t cover two things at once.

Killing Jobs?

In the same speech, Romney repeated another frequent attack on “Obamacare”:

Romney: I want to get rid of Obamacare because it’s killing jobs in small business.

This oft-cited claim is based, in part, on a faulty reading of a report from the Congressional Budget Office in August 2010. Here’s what the report says:

CBO: The Congressional Budget Office(CBO) estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount—roughly half a percent—primarily by reducing the amount of labor that workers choose to supply. …

The expansion of Medicaid and the availability of subsidies through the exchanges will effectively increase beneficiaries’ financial resources. Those additional resources will encourage some people to work fewer hours or to withdraw from the labor market. …

Changes to the insurance market, including provisions that prohibit insurers from denying coverage to people because of preexisting conditions and that restrict how much prices can vary with an individual’s age or health status, will increase the appeal of health insurance plans offered outside the workplace for older workers. As a result, some older workers will choose to retire earlier than they otherwise would.

CBO Director Douglas Elmendorf estimated in February 2011 that “roughly half a percent” of the labor in the economy would be equal to 800,000 jobs at the end of this decade, a statement that Romney and other Republicans translated into the claim that the healthcare law would kill 800,000 jobs. But CBO didn’t say that 800,000 Americans would be without jobs unwillingly. Rather, as the quote above makes clear, it said there would be a reduction in the amount of labor supplied by workers — many of whom would decide to retire earlier than they normally would, or work fewer hours or fewer jobs, because of the subsidies provided by the law, and greater security for those buying their own coverage outside the workplace. In other words, some folks were keeping jobs they didn’t otherwise want simply because of the insurance benefits.

Medical Malpractice

Romney: I want to focus on getting the cost of health care down. And one way to do that, by the way, is to finally deal with the malpractice costs.

As we have written before, medical malpractice doesn’t have as big an impact on health care spending as Romney implies. The Congressional Budget Office estimated that limiting malpractice liability would reduce the federal deficit by $54 billion over 10 years. That’s a lot of money, to be sure, but in the context of a $2 trillion-plus health care spending market over 10 years, CBO Director Elmendorf noted the savings would “reduce total U.S. health care spending by about 0.5 percent.”

So what are the biggest drivers of health care spending? The nonprofit Kaiser Family Foundation provides a list of the major drivers, which includes prescription drugs and technology, chronic disease (which accounts for more than 75 percent of health care spending), an aging population, and administrative costs.

We Built It

Romney: [Obama] said something that was so contrary to the American experience that shocked people, regardless of their backgrounds, when he said, “If you’ve got a business, you didn’t build that – someone else did that.”

The GOP practically built its convention on the “We Built It” theme, and virtually every Romney campaign speech for the last month has contained some variation of it. The problem with the Romney attack is that it is based on a clumsily worded Obama quote taken a bit out of context.

The full context of Obama’s remarks makes it clear he was saying taxpayer-funded public support — such as education, infrastructure and research — “gave you some help” to succeed in business. He was making an argument to continue funding government programs that help businesses flourish.

Obama, July 13: If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The Obama campaign contended the word “that” in the phrase “you didn’t build that” referred to roads and bridges. That is not grammatically correct; in strictly proper usage, “that” would refer back to the closest noun, in this case “business.” But given that it was an oral rather than written speech, the Obama camp’s explanation is certainly plausible. The sentence Obama spoke just prior to his now infamous phrase does refer to infrastructure. He said: “Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that.”

More important, Obama concluded his remarks by saying: “The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.”

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